Question

ParentCo has a net investment in foreign subsidiary of USD 50m. It borrows USD 30m to hedge part of the net investment. The USD loan is designated as a hedge of net investment. During the year, the foreign currency strengthens, producing an exchange gain on the borrowings and on translation of the net investment. How are these amounts presented?

A Both gains in P&L.
B Borrowing exchange gain in P&L; net investment translation in OCI.
C Both gains offset in OCI to the extent hedge is effective; remainder in P&L.
D Both gains in OCI with separate reclassifications on disposal.
E Borrowing gain in equity; translation gain in OCI.
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